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Corn+Soybean Digest

Biodiesel Clears Major Legislative Hurdle

Thanks to a farmer-led effort that began over four years ago, Congress has passed - and President Clinton has signed into law - amendments to the Energy Policy Act (EPACT) that open the door for expanded use of biodiesel as an alternative fuel.

The amendments will allow public vehicle fleets to earn EPACT credits by using a blend of 20% biodiesel and 80% petroleum diesel, commonly called B-20.

"Approval of B-20 is significant because it provides credits for the use of biodiesel fuel made from soybean oil," says Mike Yost, president of the American Soybean Association (ASA). "And it provides biodiesel blends that offer consumers the economics necessary to make B-20 the low-cost leader in the EPACT market. This could eventually increase the price paid to farmers for their soybeans by 11 cents/bu."

Biodiesel blended fuels, such as B-20, are currently the only readily available alternative fuel that is completely compatible with existing diesel-engine technology. Fleet managers can use B-20 in their diesel-powered vehicles without a loss of engine performance, and they have an incentive to use the biodiesel blend since they can receive one EPACT credit for every 450 gallons of biodiesel they use.

There are about 375,000 buses, 295,000 medium- and heavy-duty trucks, and large numbers of off-road vehicles included in these fleets.

Mostly diesel-powered, these vehicles could easily use over 30 million gallons of pure biodiesel each year, consuming up to 219 million pounds of surplus soy oil, according to the National Biodiesel Board.

John Campbell, vice president of industrial products for Ag Processing Inc., the nation's third-largest soybean refiner, says getting the legislative change in EPACT was not as easy as some people may think.

"It was a very difficult process," says Campbell. "A lot of interests are involved, including those who don't want to see biodiesel succeed. Fortunately, there were good sponsors for the legislation. After years of effort and a lot of hard work by ASA, the state associations and the private sector, we were able to prevail."

But the inclusion of B-20 in the EPACT legislation is just one step in successfully integrating biodiesel into the fuels market, according to Campbell.

"The first thing to understand is that this is a necessary condition to the success of biodiesel, but it's not the only thing that needs to be done. The Department of Energy still has to write a rule to implement the legislation. There are a number of things that could happen during that process that could help us or hurt us.

"After that process is done, we have to go out and sell those affected fleets on using biodiesel. They've got other options. I would say, for the regulated fleets, we will probably start making some sales within a year or two."

The infrastructure to manufacture biodiesel in the U.S. is already in place with current capacity far ahead of demand, according to Campbell.

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